Texas Encourages Combined Heat and Power

On June 14, 2013, Texas Governor Rick Perry signed into law two bills that should increase the use of combined heat and power (CHP)[1] in the state. Although natural gas production has been on the rise in Texas, the use of CHP has stagnated due to a difficult financing environment and regulatory barriers, and these laws may help remove some of those barriers.

HB 2049[2] clarifies language in the Texas Utility Code to allow CHP facilities to sell electricity and heat to multiple customers near the CHP facility to maximize efficiency and minimize financial risk. HB 1864[3] clarifies how to conduct CHP feasibility studies for government facilities that seek to use CHP for disaster preparedness.

Increased use of CHP has a number of positive effects. It is much more efficient than producing heat and power separately. It will replace coal usage in the state with natural gas and therefore decrease greenhouse gas emissions. In addition, because CHP is a decentralized method of energy generation, increased usage of CHP would decrease losses that generally occur while moving power from central power plants to customers. CHP is also less vulnerable to broader grid disruptions. Lastly, unlike typical power plants, CHP uses essentially no water, a welcome benefit in drought-ridden Texas[4].